Audit Details Lack of Internal Controls at West Virginia Division of Homeland Security and Emergency Management

Photo by Steven Allen Adams West Virginia National Guard Adj. Gen. James Hoyer, left, and Division of Homeland Security and Emergency Management Director Michael Todorovich respond to lawmakers’ questions after a completed audit of the agency.

CHARLESTON — State lawmakers Sunday learned more about the issues facing the troubled West Virginia Division of Homeland Security and Emergency Management, including its ability to manage grants.

The Post Audit Subcommittee, made up of majority and minority leadership in the state Senate and House of Delegates, heard an audit report Sunday afternoon of homeland security by the Legislative Auditor’s Office.

Auditors gave the subcommittee members a hint of these issues at homeland security Nov. 11 in a letter from Legislative Manager Aaron Allred. In that letter, Allred told subcommittee members that in course of their audit, they found that the state had been under a penalty from the Federal Emergency Management Agency since 2016 due to homeland security not following grant requirements and monitoring since 2009.

Sunday’s completed audit confirmed these issues, reporting that homeland security officials did not establish any internal controls on federal grants and had not corrected monitoring issues of grant subrecipients since 2011, resulting in FEMA placing the state on manual reimbursement. Homeland security also was late four out of six years in submitting required information to FEMA, with two of the submissions being more than 170 days late.

It was discovered during the audit process that Jimmy Gianato, the longtime director of homeland security, had learned of the manual reimbursement penalty in a letter from FEMA, but never told the last two cabinet secretaries of the state Department of Military Affairs and Public Safety or officials in the governor’s office.

“It just boggles me that being placed on manual reimbursement does not filter up the line,” said Senate President Mitch Carmichael, R-Jackson. “I don’t see how that happens, particularly in the midst of meetings and so forth with FEMA as it relates to the last recovery efforts.”

Gianato, during testimony Nov. 27 before the Joint Legislative Committee on Flooding, said his staff at homeland security was aware of the penalty, which resulted in FEMA only reimbursing the state for various relief efforts after officials thoroughly detailed the need to the federal agency.

The penalty added as much as 30 days before the state could be reimbursed for expenditures of more than $100,000, and it kicked in just months before the devastating floods during the summer of 2016.

During the flood committee testimony, Gianato — who was removed as homeland security director in October, but remains as homeland security adviser on issues, such as grant funding — told the committee the lapses in grant reporting to federal officials were due to a lack of staff to handle the reporting requirements. However, Sunday’s audit report contradicted this claim.

According to the audit report, homeland security did not apply for more than $12 million in federal grant money — called Category Z funding — that would have paid for additional staff and training. West Virginia is three years behind in drawing down more than $8.3 million in federal grant funds, including $5.4 million that is owed to counties and cities.

Starting in October, homeland security has been put under the West Virginia National Guard, with Gianato reporting to Adj. Gen. James Hoyer. Retired Lt. Col. Michael Todorovich, Gianato’s deputy director at homeland security, is now the director for the agency. The audit recommends that the Department of Military Affairs and Public Safety — which oversees both homeland security and the West Virginia National Guard — should be more involved in supervising the agency.

“Given the issues … the Legislative Auditor recommends that the Department of Military Affairs and Public Safety needs to oversee the establishment of an effective internal control environment in (homeland security),” the audit said. “This mismanagement impacts not only the agency, but also the citizens, counties and other entities (homeland security) is charged with assisting. The Legislative Auditor finds that the Department of Military Affairs should assume greater oversight … and impose accountability on the agency.”

Noah Browning, a senior analyst for the Performance Evaluation and Research Division of the Legislative Auditor’s Office, told the subcommittee that he believes the issues at homeland security resulted from a lack of staff, with no oversight or internal auditing procedures.

“We were told throughout our interviews that staffing was the routine cause of all of their issues,” Browning said. “However, as we noted, there are no policies and procedures within the agency, so it could be a systemic breakdown.”

Hoyer and Todorovich both told the subcommittee that they agreed with the issues raised in the audit report and were working to correct them. Hoyer said homeland security now has internal audit staff for federal and state funding to ensure they’re following grant requirements. He also said that homeland security is making personnel changes using the Military Authority to make additional hires, including 20 additional employees and another six on the way.

Hoyer said he would also make use of Category Z funding for additional staff, having already submitted a plan to FEMA for $1.5 million.

“We are well on the way to resolving the issues,” Hoyer said. “We have a plan, we are moving forward and we will execute the Category Z funding in the appropriate best interests of the citizens of West Virginia and ensure that all that money is used to make sure we’re doing what we need to do.”

Hoyer said homeland security has requested $6 million from FEMA of the $8.3 million in Emergency Management Performance Grant money that hasn’t been drawn down. As for Gianato, Delegate Eric Nelson, R-Kanawha, asked what his status was within the new structure between homeland security and the National Guard.

“If you’re talking specifically about Mr. Gianato, he has moved to a position working directly for me within the organization,” Hoyer said. “I believe you’ll see further transition here in the future.”

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